TMI Blog2022 (1) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... delayed payment of service tax as well as TDS is an allowable expenditure. Similar proposition has been laid down in other case laws that such interest is compensatory in nature and is allowable expenditure. Appeal of the assessee stands allowed. - ITA No. 5298/Del./2018 - - - Dated:- 5-1-2022 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER And SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER FOR THE ASSESSEE : NONE FOR THE REVENUE : SHRI ABHISHEK KUMAR, SR. DR ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the assessee is directed against the order of the ld. CIT (Appeals)-9, New Delhi dated 19.01.2018 for the assessment year 2014-15. 2. The ground of appeal taken by the assessee read as under :- 1. The Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness expenditure for earning more revenue, it should not be considered as penalty. 5. Ld. CIT (A) was not convinced. He held that in view of the express legal provision as contained in section 201 r.w.s. 40 of the Act, there is no reason to interfere with the decision of AO in treating the amount of Rs.5,96,890/- being interest on late deposit of TDS as disallowable expense. Hence, he confirmed the same. 6. Against this order, assessee is in appeal before us. None appeared on behalf of the assessee. We have heard ld. DR for the Revenue and perused the records. 7. We note that the assessee by way of paper book and synopsis has submitted that the interest on TDS is an allowable expenditure. For this, catena of case laws has been m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computing the income under the head of profits and gains business. The perusal of the Balance of the assessee placed in this compilation at page no. 06 to 14 for ready reference clearly indicates that the assessee has availed huge borrowings and the expenditure on account of Finance Cost during the year under consideration is Rs.7,40,21,525/-. The money retained by the assessee on account of delayed IDS payment as part of the common pool of funds available with the assessee and the delay which resulted into interest on one hand also helped in reducing interest liability otherwise. In other words, if the IDS was paid on time there would have been almost equivalent higher claim of allowable interest of the assessee. The appellant's submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Supreme Court in the case of Lachmandas Mathuradas vs. CIT (2002) 254 ITR 799 (SC) wherein it was held that interest on arrears or on outstanding balance of sales tax is compensatory in nature and would be allowable as deduction in computing profits of a business. 10. Referring to the same decision, ITAT in the case of Narayani Ispat (P) Ltd in ITA No.2127/Kol/2014 for AY 2010-11 vide order dated 20.08.2017 has held that interest expenses on account of delayed payment of service tax as well as TDS is an allowable expenditure. Similar proposition has been laid down in other case laws that such interest is compensatory in nature and is allowable expenditure. 11. In view of the above, respectfully following the precedents, we set ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
